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Reaching Out To Our Communities2002 Charitable Giving Report

Table of Contents1 Fulfilling Our Commitment

2 Reaching Out To Our Communities

3 Giving Programs

5 Health & Human Services

7 Education

9 Arts & Culture

11 Community Development

13 Diversity

15 Economic Education

17 Youth

19 Workplace Giving

21 Employee Involvement

22 Support Of Employee Efforts

Fulfilling Our Commitment | 1

Fulfilling Our Commitment More than ever, Morgan Stanley is committed to strengthening the

communities where our employees live and work.

Despite a difficult year—the aftermath of the September 11th attacks,

a challenging business environment and economic uncertainty—

Morgan Stanley’s commitment to be a good corporate citizen was

stronger than ever. Through dollars and deeds, the Firm and its

employees reached out to our communities with the same energy

and commitment that we bring to our work.

We are extremely proud of the people of Morgan Stanley.

Philip J. Purcell

Chairman and Chief Executive Officer

2 | Reaching Out To Our Communities

Reaching Out To Our CommunitiesMorgan Stanley and its employees contributed well over $35 million to charitable organizations

in 2002—through Company contributions, our Foundations and individual gifts.

Company contributions totaled more than $26 million and supported a broad range of programs

in health and human services (page 5); education (page 7); the arts (page 9) and community

development (page 11).

These efforts included significant grant-making in four key areas: diversity (page 13); economic

education (page 15); at-risk youth (page 17) and support of employee volunteerism (page 22).

Giving Programs | 3

Giving ProgramsWe provide support directly from each of our business units and through our U.S.-basedand international foundations and the Morgan Stanley Victims Relief Fund, foundedlast year. Our 2002 programs benefited more than 600 communities worldwide andinvolved the personal efforts of more than 30,000 employees.

Our overarching mission is threefold:

■ build the potential of individuals and families;

■ encourage and support our employees’ charitable efforts; and

■ strengthen relationships with our communities.

2002 Company Giving by Category

…efforts of more than 30,000 employees.

Health & Human Services 51%

Education 31%

Arts & Culture 11%

Community Support 5%

Other 2%

Health & Human Services | 5

Health & Human ServicesMorgan Stanley believes that a strong community begins with the health and

well-being of its individuals. Our funding supports hospital programs, social

service initiatives, and non-educational services for youth in communities

where our employees live and work.

2002 Highlights

Juvenile Diabetes Research Foundation (JDRF)In 2002, Discover Financial Services (DFS) partnered with the Juvenile DiabetesResearch Foundation for the fourth consecutive year. Well over $700,000 was raisedthrough team walks and special employee fundraising events, including a black-tie galadinner in the Delaware chapter hosted by Discover Bank.

Breakthrough for Hong Kong YouthThrough the use of cultural media, counseling services and motivational activities,Breakthrough helps young people develop a positive outlook on life and fulfill theirdreams. Through a special HK$387,000 donation, Morgan Stanley provided funding for Breakthrough’s Leadership Program for Potential Jobless School Leavers, which isdesigned to unlock the potential of young people by strengthening their self esteem,communication skills, resilience and path-finding ability. Morgan Stanley employeesraised nearly half of the funding for the project.

Morgan Stanley Victims Relief FundThroughout 2002, the Morgan Stanley Victims Relief Fund continued to provide ongoingsupport to the families of employees and contractors who were lost or injured in theSeptember 11th attacks, as well as to community organizations serving victims at large.By year-end, the Fund had provided $14 million to help victims. As a special tribute, theFirm held a memorial service on September 4, 2002 and dedicated a permanent plaque atour world headquarters to our 13 colleagues who were lost on September 11th.

Discover Financial Services’ commitment

to JDRF has been outstanding; every

year it finds new ways to help raise the

dollars we need to fund world-class

research. Finding a cure for diabetes

has truly become a company-wide

passion at Discover Financial Services

—and a real demonstration of the

company’s core value of volunteerism.

Peter Van Etten President and CEO of Juvenile Diabetes Research Foundation

…a strong community begins with health and well-being.

Education | 7

EducationAt Morgan Stanley, we believe that the path to excellence begins with education.

We are proud of our ongoing efforts to enhance all levels of education—particularly

those that help disadvantaged children develop the skills they need to succeed.

2002 Highlights

American Indian College Fund Working in partnership with the American Indian College Fund, Morgan Stanleylaunched a two-year, $220,000 initiative to create educational opportunities for NativeAmericans. The Morgan Stanley/American Indian College Fund Scholars Program offersboth scholarship support and a unique mentoring initiative, “Helping Hands.” Nearly40 American Indian students at Tribal Colleges and four-year institutions will benefitfrom the program.

Discover Card Tribute Award® Scholarship ProgramIn 2002, The Discover Card Tribute Award® Scholarship Program provided $1.2 millionto award scholarships to 412 high school juniors whose accomplishments go beyond justacademics. The program supports post–high school education and training for students atboth the state and national levels. Established in 1991 by Discover Card in cooperationwith the American Association of School Administrators, the program has awarded almost$10 million in scholarships to more than 4,500 students nationwide since its inception.

We are extremely honored to

receive such a generous gift from

Morgan Stanley, one that is making

an immediate impact on American

Indian higher education and which

will have a positive ripple effect for

generations to come. This program

helps illustrate how Morgan Stanley

truly stands behind its credo of

diversity, opportunity and inclusion.

Richard B. WilliamsExecutive Director, American Indian College Fund

…the path to excellence begins with education.

Arts & Culture | 9

Arts & Culture At Morgan Stanley, we celebrate innovation and creativity through our support

of the arts. In addition to providing year-over-year funding for major cultural

institutions, we also support cultural events that entertain, educate, and

introduce the arts to new audiences.

2002 Highlights

New Home for Alvin AileyThe Alvin Ailey American Dance Theater, one of the world’s most beloved and acclaimeddance organizations, will have a new home, thanks in part to Morgan Stanley’s $1.5 milliondonation to fund a new state of the art facility in Manhattan. Complete with studios, a “black box” theater, a school and offices, the new building will be the largest facilitydedicated exclusively to dance in the United States. Morgan Stanley’s gift will also helpto create an endowment that will secure the future of Ailey’s inspiring performances and educational programs that use the beauty and humanity of the African-Americanheritage and other cultures to unite people of all ages, races and backgrounds.

Great Performers’ Series at the Sydney SymphonyOn July 27th, 2002 Morgan Stanley introduced Australian audiences to the ‘Hi-Ten-Yu‚’concerto for taiko drums and orchestra by Matsushita at the Sydney Symphony. The event,entitled “Music of the Spheres,” marked the third year of the Morgan Stanley GreatPerformers’ Series at the Symphony and featured a musically innovative, eclectic programby Japanese artists. The Firm will continue its $100,000 sponsorship and associationwith the Sydney Symphony in 2003 with a new series, called: Morgan Stanley—Music.

The Orpheus Chamber OrchestraIn 2002, Morgan Stanley became the first global sponsor of the Orpheus ChamberOrchestra, which opened its 30th anniversary season at New York City’s Carnegie Hall.Four times a Grammy Award winner, Orpheus is known around the world for thesuperb quality of its performances and the unique creative method behind them.Orpheus has no one conductor: its members are its leaders. Musical audiences, businessstudents and executives alike take part in workshops to study the collaborative approachknown as the “Orpheus Process.” Orpheus will be performing through June 2003 acrossthe United States, Japan and Singapore.

…introduce the arts to new audiences.

Morgan Stanley’s generous support of

the Sydney Symphony has evolved into

a strong, unique partnership over the

past four years and has enabled the

Orchestra to offer Sydney audiences

groundbreaking programs and artists

of international calibre.

Louise WalshPartnerships,Sydney Symphony

Community Development | 11

Community DevelopmentMorgan Stanley is dedicated to strengthening our communities worldwide through

economic development initiatives, support of the nonprofit sector, and sponsorship

of community events and activities.

2002 Highlights

Community Support in UtahIn addition to providing nearly $7 million in loans and investments in the community,Morgan Stanley Bank of Utah contributed over $200,000 to nonprofits that supportcommunity development initiatives for low and moderate income Utahans in 2002.Among the projects funded through this ongoing initiative, was The Family SupportCenter’s LifeStart Village, a cutting edge transitional and permanent housing project.The project serves 120 women and children annually, providing them with a safe havenand a host of on-site education and counseling services.

Continuing India Earthquake ReliefIn 2002, JM Morgan Stanley India Foundation continued its support of rehabilitationefforts for the people of Gujarat, who were devastated by a massive January 2001 earthquake.Through a $35,600 donation, the Foundation ensured the completion of 114 homes inMota Ratadia, a remote village in Kutch that was among those most affected by the quake.The Foundation support helped to rebuild more than half of the homes in the village.

…strengthening communities worldwide.

The Village sincerely thanks

Morgan Stanley, on behalf of the

over 120 single mothers and their

children who will receive services

because of this most generous

donation. We are grateful for the

company’s efforts to strengthen

the community in which we all live.

Jayne L. WolfePh.D. and Executive Director,The Family Support Center and the Village Project

Diversity | 13

DiversityDiversity is a long-standing core value of the Firm and is embedded in our business

principles. Morgan Stanley supports programs that provide business education,

job readiness and scholarships to minorities, women and the physically challenged.

2002 Highlights

Our Partners Program Funded

ASPIRA Youth Entrepreneurial Leadership Initiative, developing entrepreneurship skills of inner-city Latino youth through schoolbased activities and class curriculum.

Hispanic Scholarship Fund Scholarship aid for students of Hispanic heritage pursuing higherdegrees in business, finance and computer science.

Hispanic Alliance for National initiative offering mentoring, internships, leadership Career Enhancement development and career counseling to Latino high school and

college students.

Opportunity Foundation Material goods and services for the physically challenged to assistof America them in obtaining and retaining meaningful employment.

University of Maryland Better Opportunities Through Online Education, providingUniversity College working-poor women with scholarships for full tuition, a personal

computer with Internet access and academic support to help students obtain college level certificates.

Morgan Stanley Diversity Internship ProgramsWe provide scholarships and internships to minority students at both the undergraduateand graduate levels through our Richard B. Fisher Scholars and Morgan Stanley FellowshipPrograms. Students intern in offices across the country in every area of the Firm, gainingunparalleled real-life exposure to the financial services industry. Since 1993, we haveawarded over $2.2 million in such scholarships to nearly 220 students.

…long standing value of the Firm.

Through Morgan Stanley’s generous

support, the Hispanic Alliance for

Career Enhancement is able to

offer career direction, guidance and

support to the growing Latino high

school and college population. This

enlightened support will create a

lasting impact and provide a future

legacy of Latino diversity within

corporate America, the government

and our national workforce.

Abe Tomás Hughes, IIChairman of the Board,Hispanic Alliance for Career Enhancement (HACE)

Economic Education | 15

Economic EducationAt Morgan Stanley, we believe that knowledge is the key to understanding

personal finances. Morgan Stanley supports organizations that teach financial

literacy, develop entrepreneurial spirit and, ultimately, help people achieve their

financial aspirations.

2002 Highlights

Our Partners Program Funded

Classroom, Inc. Good Cents: A Personal Finance Program for Kids, an interactivecomputer simulation, teacher training and volunteerism program thatteaches basic savings, investment and responsible credit card useto 7th and 8th grade students.

Count Me In for Women’s Online entrepreneurial and financial literacy training targetedEconomic Independence for women.

Junior Achievement of Morgan Stanley High School Heroes, a volunteerism andNew York (JA) education program that trains high school students to teach the

JA economics-based curriculum to elementary school students.

National Foundation The Morgan Stanley Youth Entrepreneurship Scholarshipfor Teaching Program, training teachers from inner-city communities and Entrepreneurship (NFTE) providing materials to teach entrepreneurship to at-risk youth.

Neighborhood Financial Fitness, teaching lower-income families and individualsReinvestment Corporation how to manage their personal finances to qualify as potential home-

buyers, and to improve their overall economic well-being.

Securities Industry Market Mysteries, an online program that teaches economic Foundation for Economic concepts to children and enhances the educational content of the Education (The Stock Securities Industry Foundation’s signature program, The Stock Market GameTM) Market Game.TM

…help people achieve their financial aspirations.

The national NeighborWorks®

Financial Fitness program helps

families maximize the benefits of

homeownership, become more

resilient to financial downturns,

and recognize potential pitfalls.

Morgan Stanley’s investment in

the Financial Fitness program

is helping families nationwide

preserve and maintain their homes

and strengthen their communities.

Ellen LazarExecutive Director,Neighborhood Reinvestment Corporation

Youth | 17

YouthMorgan Stanley funds programs that help youth break free from limiting

circumstances, providing them with educational opportunities, safe places to

learn and grow, positive role models, and hope for a brighter future.

2002 Highlights

Our Partners Program Funded

A Better Chance Educational opportunities for academically talented students of color.

Boys Hope Girls Hope College Bound, a program that prepares seventh and eighth gradestudents to plan for and succeed in college.

City Year The Young Heroes program, providing leadership training, citizenship skills, and community service for middle school students.

Horizons Student A six-week academic summer enrichment program for low incomeEnrichment Program public school children.

MicroSociety, Inc. Peace Advocacy Citizenship Training, a violence prevention program for middle school students.

…hope for a brighter future.

Morgan Stanley’s commitment to help

equip the next generation with the

skills and confidence necessary to

succeed in college— and in life—

is remarkable! Our nation’s future

depends on creating a highly

educated, highly skilled workforce.

Morgan Stanley understands that, and

is building strategic partnerships

that support innovative and promising

approaches to ensuring that today’s

young people are equipped to lead

us to a bright future. We are thankful

to be among their partners!

Paul Minorini President and CEO,Boys Hope Girls Hope

Workplace Giving | 19

Workplace GivingMorgan Stanley employees give generously. In addition to their personal charitable

donations, employees also participated in numerous Firm-driven local campaigns.

2002 Highlights

Morgan Stanley Annual Appeal In the U.S., over 21,000 employees participated in the 2002 Annual Appeal campaign,raising more than $5 million in support of the Morgan Stanley Foundation (U.S.), local United Way chapters and over 3,000 nonprofit agencies that serve communitiesacross the nation.

Charity of the YearIn London, employees raised funds through the Charity of the Year campaign to benefittwo local charities: The Children’s Fund at the Royal London Hospital, which serves thelocal population in East London, and Community Links, an East London-based charitythat runs projects for children, teenagers, parents, the elderly and disabled people.Employees raised a total of £219,000, surpassing the £150,000 goal by 46%. With anadded match of £200,000 from the Morgan Stanley International Foundation, a total of £419,000 was donated to the two charities.

Dragon Boat RaceIn Hong Kong, Morgan Stanley employees took part in the annual Dragon Boat Race,the largest event of its kind in the world. The Morgan Stanley Men’s Team came in fifthout of 140 teams and raised nearly HK $200,000 for the benefit of Breakthrough, a localnonprofit organization dedicated to youth services.

Walk-a-thon for Mumbai YouthOur joint venture in India, JM Morgan Stanley, sponsored a charity walkathon thatraised U.S.$22,000 for the ‘Concern India’ Foundation. Funds benefited two local programs that provide education, shelter and support to underprivileged children.

Employee Involvement | 21

Employee Involvement VolunteerismIn 2002, Morgan Stanley employees gave their time, hearts, and hands to local community needs and organizations across the globe, for example:

In the U.S., more than 7,000 employees are actively enrolled in the Firm’s “What aDifference a Day Makes” program, each donating time to causes in their communities.From painting schools to serving meals to the hungry to raising funds in creative ways, Morgan Stanley employees in the U.S. tackled tough issues and met importantneeds in society.

In London, the total number of volunteers during 2002 rose by 56%, with the Londonworkforce contributing over 6,300 volunteer hours. In the summer of 2002, the Firmlaunched Summer Challenges, a dedicated day off for volunteering on environmental and community projects. As part of the program, employees painted local schools and a center for the homeless, cleared trash from the shores of the Thames and planted trees.Morgan Stanley was also recognized in 2002 with an Award from the Tower HamletsEducation Business Partnership for employees’ outstanding participation in Head toHead, a mock interview program with local high school students.

Hong Kong employees continued to support Helping Hand, an organization dedicatedto the care of the elderly. In 2002, employees were instrumental in launching the organi-zation’s “Leisure Trailer,” a portable program that delivers services to homebound elderlyresidents. Employees helped design the project, develop resources and equipment andeven painted the trailer. In recognition of the firm’s charitable and volunteer activities in Hong Kong, Morgan Stanley was presented with the Caring Company Award by theHon. Donald Tsang, acting Chief Executive of the Hong Kong SAR government andthe Hong Kong Council of Social Services.

In Singapore, employees combined their dollars and deeds to benefit two charities:Children-At-Risk-Empowerment Association (CARE), an organization that provides kidsin need with hope for the future through education and mentorship, and The Care forthe Elderly Foundation (CEF), which provides medical services and support to the sickand poor elderly. In addition to a S$10,000 contribution to each of these two organiza-tions, the Morgan Stanley Singapore office established volunteer efforts for employeeswith both organizations, including mentoring the children and visiting the elderly.

The kids here have failed since

kindergarten. All feel they are good

for nothing. But I see them as our

future entrepreneurs. They dare to

take risks and break rules. With the

help of Morgan Stanley employees,

we try to help them gain confidence

and achieve their academic goals.

Lan Teo Founder and Director, Children-At-Risk-Empowerment Association,Singapore

22 | Support Of Employee Efforts

Support Of Employee Efforts Volunteer Incentive ProgramMorgan Stanley encourages its employees throughout the U.S. to donate their time generously to charities. To bolster their efforts and foster relationships with our localcommunities, the U.S. Foundation provides grants through our Volunteer IncentiveProgram (VIP). Our VIP grants, typically ranging between $500 and $5,000, are awardedto health and human service charities where our employees are active and ongoing volunteers. In 2002, the Firm donated over $2.7 million to more than 640 organizationsthrough the VIP, supporting the work of more than 3,500 employee volunteers.

Matching GiftsMorgan Stanley currently offers programs in the U.S., Hong Kong and the U.K. thatmatch a portion of employees’ personal financial contributions.

In the U.S., these programs support accredited educational institutions and providednearly $1.3 million to over 1,000 schools in 2002. Changes to the program this yearallowed 20,000 additional employees to participate and raised the match to $2,000per eligible employee.

In London, the Firm expanded the Foundation’s Matching Grant Programme in the lastquarter of 2002 to include grants to organizations where our employees are active andregular volunteers. As a result, grants under this program increased by 26% to £161,000.

Employees in Hong Kong are also eligible for matches to their personal contributions.The program, launched in 2000, provides a HK$5,000 match to employees financialcontributions. The program provided U.S.$100,000 in 2002 through this program.

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y…our employees donate dollars and deeds.

Morgan Stanley Community [email protected]

Morgan Stanley Community Affairs1601 Broadway, 12th FloorNew York, NY 10019